A LexisNexis Blog

IPO of the Month: Bipartisan Broodmares and Not Just Another Weanling

What’s more risky than betting on horse racing? Answer: Betting on betting on horse racing. And if you choose to invest in our featured June Initial Public Offering, that is exactly what you will be doing.

Regius Thoroughbreds, Inc. was incorporated in Nevada on May 24, 2011 “for the purpose of buying, selling, and racing thoroughbred horses of every age from broodmares, weanlings, and yearlings to racing age horses.”

They got off and running right out of the gate, filing an S-1 signifying their IPO—offering 62,000,000 shares of stock—only ten days later. As of that day, June 3, 2011, Regius Thoroughbreds owns and takes care of four blood horses, named Bipartisan, Snovember, Just Another Bud, and Annika’s Love. Snovember is the rising star, recently placing 2nd in a race. In addition to these fortuitous fillies and competitive colts, Regius “anticipate[s] the acquisition of up to 50 [horses] within the next 12 months.” This is the first IPO in the horse-racing industry since December 1996.

The company, specializing in the bloodstock variety of the equus caballus, plans to breed and break thoroughbreds until they are past greenbroke and ready for the jockey to don his jodphurs and race.

So, at only $0.05 per share, what are you waiting for? Giddy up and gamble on the gainful gaits of these glorious gallopers!

Well, some might want to hold their horses for a minute. Even if the jockey’s stirrups are acey-deucy, there are still some important risk factors to note before investing. As with so many fledgling companies, this S-1 filing is rampant with cautionary statements raising as a “going concern” Regius Thoroughbreds’ ability to continue. Or, in horse-lingo, it is a great possibility that Regius Thoroughbreds, if they do make it to the starting gate of their stakes race, will be facing a pessimistic morning line on a muddy track and may as well just scratch.

Furthermore, besides the usual risk factors associated with investing in new companies, there is the added concern that to purchase this stock—or that of any horse-racing or gambling enterprise for that matter—you are essentially placing a bet on betting itself. Your money is not only subject to the risks of the stock market, but to the exponentially increased risks of horse-racing: injury, weather, and luck, to name a few. Ideally, of course, Regius will keep a detailed studbook and select and train winning horses which will not become barn sour, balk at the gate, or be over-worked and develop azoturia. And hopefully these racing horses will not become sick or injured and be destined to a fate of performing in the kur.

Even if all that is avoided, however, investors must still dodge a number of potential pitfalls. Not only must they rely on the scenario that horse-racing continues to be a popular and profitable betting franchise, but also—as Regius themselves so honestly concede—they must hope to avoid the circumstance that “thoroughbred racing…be subjected to restrictive regulation or banned entirely, which could adversely affect the conduct of the company’s business.”

At the end of the day, it will be up to investors to decide if Regius, charging ahead at full tilt and champing at the IPO bit, will prove to have been a safe bet or a long shot. No one wants to pony up money only to back the wrong horse.